Understanding What Credit Card Disclosure Really is
There is always a detail on a credit card’s pricing and fees for all credit card bonus. Because by law all credit card issuer is to disclose the same pricing information so, customers can efficiently compare credit cards to choose a credit card of their choice base on their cost preferences.
And in this disclosure, the credit card issuer is to give competitive pricing. According to the Lending Act, the credit card issuer is required to add these disclosures to the credit card application and new credit card issued. Below are what you will see in a credit card disclosure.
APR | Credit Card Disclosure
APR means annual percentage rate. Some credit cards have a lot of APRs, and this must be in the credit card disclosure. These APR are:
Purchase or Regular APR. An APRs or many APRs can be listed. Your credit history, amount of debt and income determine the APR that will be given to you.
Balance transfer APR.
You will see the introductory balance transfer rate, the post-promotional balance transfer APR and the rates period in the disclosure. For some credit cards, the balance purchases APR transfer APR might be the same.
Penalty APR.
This also known as default APR, it is the APR charged if you default on your credit card terms. When you are to pay this APR and how long it can last, is always stated in the credit card disclosure.
Grace Period
This is the amount of time you have to complete your balance without paying interest. It may see it under the section How to avoid paying interest on purchases in the credit card disclosure.
It is interesting to note that the grace period applies only on purchases, excluding cash advances and balance transfers. This means that you are to pay interest rate immediately you default on these payments. Also, the grace period may not apply to those who had a balance at the beginning of the billing cycle.
Promotional APR.
This must be listed, together with the promo rates period and actions that will end the promo rate instantly.
Cash Advance APR.
This APR is normally higher than other APRS.
It must be stated in an APR disclosure if the APR is fixed or variable APR. If variable or unsteady the disclosure is to have in it the index rate.
Minimum Finance Charge.
When you are charged interest on your account, there is a specific amount of money you are to pay as a minimum finance charge and this is indicated in the disclosure. For instance, you may be asked to pay a minimum charge of $1.00 even though your calculated finance charge is $0.75.
Finance Charge Calculation Method.
How your finance charge is calculated must be stated in your disclosure. Using your interest rate and either your average daily balance, beginning balance, ending balance, or an adjusted balance, your credit card issuer can calculate your finance charge. Bear in mind that your finance charge may not include new purchases.
However, the double billing method of calculating finance charge is not allowed. That is credit card issuers are not allowed to assess a finance charge on balance that has been paid.
Fees | Credit Card Disclosure
All the fees that come with your credit card are listed on your credit card disclosure. Though these fees is based on the credit card you have or applied for, but some credit card fees are, cash advance fee, foreign transaction fee { also known as currency conversion fee}, late payment fee, returned payment fee, balance transfer fee and over-the-limit fee, so it is not limited to annual fee.
Note that some fees, like the annual fee, are fixed. While other fees, like the balance transfer fee and cash advance fee may be fixed or vary based on the amount of transaction. For instance, a cash advance fee may be $5 or 5% or the advance, whichever is higher.
